Winnebago has gotten torched over the last six months - since November 2024, its stock price has dropped 41.4% to $34.30 per share. This might have investors contemplating their next move.
Is now the time to buy Winnebago, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Do We Think Winnebago Will Underperform?
Even though the stock has become cheaper, we're cautious about Winnebago. Here are three reasons why WGO doesn't excite us and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Winnebago’s 3.9% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the industrials sector. 
2. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Winnebago, its EPS declined by 14.6% annually over the last five years while its revenue grew by 3.9%. This tells us the company became less profitable on a per-share basis as it expanded.
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Winnebago’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
We see the value of companies helping their customers, but in the case of Winnebago, we’re out. After the recent drawdown, the stock trades at 7.7× forward P/E (or $34.30 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are superior stocks to buy right now. Let us point you toward a top digital advertising platform riding the creator economy.
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